Hi Traders! US Dollar Index short term forecast update and follow up is here. On November 16th 2022 I shared this “US Dollar Index Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, based on the Heikin Ashi candles we can see that currently, we have strong bearish bodies here as well in downward moving market conditions so it basically reflects a bearish environment. In addition to this, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a correction is happening. Also, we had two strong support zones that has formed, the price moved lower broke below these zones and is holding below them, we may consider this as yet another evidence of bearish pressure. Currently, these strong support zones are acting as strong resistance zones for us. Until these two strong resistance zones (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further.
In Dollar index until the two strong resistance zones hold I was expecting short term bearish moves to happen here. The price action moved exactly as I expected it to in my analysis. After the bearish trend pattern, we had a pullback with the price reaching the first strong resistance zone, respected it and then it bounced lower from this zone. The price then moved lower further and has delivered 380+ pips move to the downside as you can see in the image below!
On the H1 chart, the market provided us with various facts supporting the bearish view. After the bearish trend pattern, we had a pullback and the price which was moving higher has created a false break of the last high at 106.871. The price then moved lower and has broken below the most recent uptrend line, we may consider these as facts provided by the market supporting the bearish view. Also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower after that and provided an excellent move to the downside.
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
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